Drivers may qualify for car tax exemption under certain conditions. Car tax, officially known as Vehicle Excise Duty (VED), is typically an annual payment, although there are options for payment spreading. The standard rate for all cars registered post-April 2017, excluding the first-year rate for new vehicles, is currently £195 annually.
Different car tax rates apply to vehicles registered between March 1, 2001, and March 31, 2017. Rates range from £20 per year for vehicles emitting up to 100g/km of CO2 to £760 per year for those emitting over 255g/km of CO2.
If you receive certain disability benefits like PIP, you could be eligible for up to 100% car tax exemption, with full exemption for higher rate beneficiaries and a 50% discount for standard rate recipients. Organizations using vehicles to transport disabled individuals are also exempt, excluding ambulances.
Vehicles manufactured before January 1, 1985, are not required to pay car tax, and mobility vehicles and powered wheelchairs meeting specific speed restrictions are also exempt. If your vehicle is not in use and declared off public roads with a Statutory Off Road Notification (SORN), you are exempt from road tax for that vehicle.
In related news, Rachel Reeves disclosed in the Budget that the 5p per litre fuel duty reduction by the Conservative government in March 2022 will only be extended until August 2026, gradually reverting to 2022 levels by March 2027. Starting April 2028, a new charge of 3p per mile for electric vehicles and 1.5p per mile for plug-in hybrids will be implemented.
Fuel duty, separate from car tax, is part of the pump price, with an additional 20% VAT charged.